Walaa Cooperative Insurance Maintains ‘A-’ Rating from S&P Global Amid Strategic Growth and Challenges
Saudi-based insurer Walaa Cooperative Insurance retains ‘A-’ financial strength rating, bolstered by capital raise and growth initiatives but faces challenges in profitability, particularly in medical insurance.
Saudi Arabia's Walaa Cooperative Insurance Co. has maintained its ‘A-’ long-term insurer financial strength rating from S&P Global, with a stable outlook.
Additionally, S&P affirmed its ‘gcAAA’ long-term Gulf Cooperation Council (GCC) regional scale rating and ‘ksaAAA’ long-term Saudi national scale assessment for the company, citing its solid capital position and planned business growth.
The company completed a SR468 million ($124.8 million) rights issue in December 2024, aimed at supporting its expansion strategy and enhancing its regulatory solvency margin.
Prior to the capital increase, Walaa’s capital adequacy exceeded the 99.99% confidence level, and S&P expects it to maintain this level of capital adequacy over the next two years.
Despite these strengths, Walaa has faced challenges in profitability, especially in its medical insurance segment.
The company’s combined ratio, a key measure of underwriting performance, stood at 101% for Q3 2024, up from 98% in the same period the previous year.
The medical insurance segment posted a significant loss of SR85 million in Q3 2024, compared to a SR4 million loss in Q3 2023. Walaa plans to expand this segment with an aim to break even by the end of 2025, although S&P notes that achieving this goal could be challenging given the highly competitive medical insurance market in Saudi Arabia, which is projected to reach $4.33 billion in 2024. The market is currently dominated by The Co. for Cooperative Insurance and Bupa Arabia for Cooperative Insurance.
Despite these challenges, Walaa’s motor insurance segment showed signs of improvement, returning to profitability with a reported service result of SR18 million for Q3 2024. The company’s ability to recover its overall performance will depend largely on the recovery of its medical insurance business.
S&P expects Walaa to improve its combined ratio to around 98% by 2025-2026 as it diversifies its business.
The agency flagged potential risks to the company’s rating, particularly if underwriting performance lags behind local and regional peers or if capital adequacy falls below 99.95%.
However, S&P views the possibility of an upgrade as limited during the outlook period, noting that any positive rating action would depend on significant growth and diversification of premium income, alongside the maintenance of strong capital adequacy and low-risk investment strategies.
Additionally, S&P affirmed its ‘gcAAA’ long-term Gulf Cooperation Council (GCC) regional scale rating and ‘ksaAAA’ long-term Saudi national scale assessment for the company, citing its solid capital position and planned business growth.
The company completed a SR468 million ($124.8 million) rights issue in December 2024, aimed at supporting its expansion strategy and enhancing its regulatory solvency margin.
Prior to the capital increase, Walaa’s capital adequacy exceeded the 99.99% confidence level, and S&P expects it to maintain this level of capital adequacy over the next two years.
Despite these strengths, Walaa has faced challenges in profitability, especially in its medical insurance segment.
The company’s combined ratio, a key measure of underwriting performance, stood at 101% for Q3 2024, up from 98% in the same period the previous year.
The medical insurance segment posted a significant loss of SR85 million in Q3 2024, compared to a SR4 million loss in Q3 2023. Walaa plans to expand this segment with an aim to break even by the end of 2025, although S&P notes that achieving this goal could be challenging given the highly competitive medical insurance market in Saudi Arabia, which is projected to reach $4.33 billion in 2024. The market is currently dominated by The Co. for Cooperative Insurance and Bupa Arabia for Cooperative Insurance.
Despite these challenges, Walaa’s motor insurance segment showed signs of improvement, returning to profitability with a reported service result of SR18 million for Q3 2024. The company’s ability to recover its overall performance will depend largely on the recovery of its medical insurance business.
S&P expects Walaa to improve its combined ratio to around 98% by 2025-2026 as it diversifies its business.
The agency flagged potential risks to the company’s rating, particularly if underwriting performance lags behind local and regional peers or if capital adequacy falls below 99.95%.
However, S&P views the possibility of an upgrade as limited during the outlook period, noting that any positive rating action would depend on significant growth and diversification of premium income, alongside the maintenance of strong capital adequacy and low-risk investment strategies.
